Nine Memory Makers Fined for Price Fixing

The European Commission is levying some of the largest fines ever on hardware manufacturers. Nine of ten memory manufacturers were fined for their part in a price fixing scheme that affected the EU between 1998 and 2002.

While it is nice to show that price fixing will not be tolerated, it remains to be seen how the EU will prevent the fines from being recouped with higher prices on memory now. This is one of those problems in economics that would seem to prevent any sort of fine scheme having any more than a palliative effect for those involved.

The European Commission, the long arm of the EU, has today announced fines totaling 331,273,800 Euro or about $407.19 million for memory manufacturers Samsung, Hynix, Infineon, NEC, Hitachi, Mitsubishi, Toshiba, Elpida and Nanya, for their participation in a DRAM price fixing cartel.

Micron is the tenth company found guilty of involvement but, because it was the one that came forward to expose the cartel, it was granted full immunity from fines.

According to the EC the firms mentioned have coordinated the price levels of DRAM memory sold to OEMs in European Economic Area since July 1st 1998 and June 15, 2002, this being in violation of the EU Treaty which bans practices restrictive of competition. How can there be competition if the players agree on the score

“This first settlement decision is another milestone in the Commission’s anti-cartel enforcement. By acknowledging their participation in a cartel the companies have allowed the Commission to bring this long-running investigation to a close and to free up resources to investigate other suspected cartels. As the procedure is applied to new cases it is expected to speed up investigations significantly, said Commission Vice President and Competition Commissioner Joaquín Almunia.

According to the data supplied by the Commission, Samsung received the largest fine – €145.7 million, followed by Infineon (€56.7 million) and Hynix (€51.4 million).

Another problem is that of spreading the fines around. Since the fines are levied now, don’t we all, everyone who uses memory, over the entire world, end up paying these fines?